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The End of the Industrial Revolution

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What a privilege it is to be alive in these times, in such a significant period in human history. It’s not always easy to see moments of great historical importance when you’re in the middle of them. Sometimes they’re dramatic, like the fall of the Berlin Wall or the landing on the moon. But more often the really big ones appear, from within them, to be unfolding in slow motion. Their actual drama and speed then only becomes clear in hindsight.

That’s how it will be with this. But in the end we’ll look back at this moment and say, yes, that’s when it was clear, that’s when the end game began. The end game of the industrial revolution.

Hang on, you’re thinking. The industrial revolution? With its belching smokestacks, dirty industry and steam engines? You thought we left that behind long ago, right? You look at your smart phone, robots on Mars, the rise of Facebook and Google and think ‘we’re well past all that’. Isn’t this the age of knowledge, when we’re all hyper-connected in a 24/7 information rich economy? Think again.

Hiding behind those entertaining devices, information overload and exciting new companies, the real bulk of the economy is still being driven by those dirty belching smokestacks and is still being shaped by those who inherited the economic momentum of 19th century England – the coal, oil and gas industries. Look at any list of the world’s 20 largest companies by turnover and you’ll see around three quarters are either producing fossil fuels, trading them or converting them into transport or energy. So I’m afraid the proverbial belching smokestacks still underpin our economy. But they are now in terminal decline. Yes, after 250 years, their time is coming to an end – and faster than you, or they, think.

For those of us focused on social change, it doesn’t get much more exciting than this. When I was writing my book The Great Disruption during 2010, and even when it was published just a year ago, the ideas in it were still fringe to the mainstream debate – a radical and provocative interpretation of what was happening. Most thought my argument – that a crisis driven economic transformation was inevitable – were, if correct, certainly not imminent and would not impact for decades. Just two years later, we only have to look around to see the disruption underway, as the old economy grinds to a halt, and the incredible opportunity for change that is now all around us.

It’s going to be a wild and exhilarating ride, with winners and losers, crises and breakthroughs. There’ll be a fair amount of chaos and we’ll teeter on the edge for a while, wondering if we’ll get through. But we will, and we’ll then look back to this time and say, yes, I was there. I was there when the third great wave of human progress began. The first was the domestication of plants and animals, enabling what we today see as civilisation to form. The second was the industrial revolution with its great technological and human progress but inherent unsustainability because it depended on taking energy from the past and ecological capacity from the future.

Now we shift to the third great wave, the world post the industrial revolution. To an economy designed to last, that is built around the present and nurtures the future. This will be an era where we…… well, that’s the exciting bit. We get to decide what comes next. We get to decide what the third great phase of human progress looks like.

Like many, I feel a great impatience sitting here on the edge of it all. Waiting for it to be clear to everyone that it’s time to stop pretending the old models will somehow get back to normal. We lurch from crisis to crisis, but never seem to face up to the reality that old normal is gone, that step change is now our only option. I’m not alone in that impatience. The legendary investment manager Jeremy Grantham recently said “The economic environment seems to be stuck in a rather unpleasant perpetual loop. ……I, for one, wish that the world would get on with whatever is coming next.”

The world actually is getting on with it, at an incredible pace, but building the momentum of the new takes time. And perhaps of more immediate concern, the dismantling of the old economy and the decline of the fossil fuel industry is being fiercely resisted by those who own it. To be fair, you can’t really blame them. I can’t imagine I’d take kindly to everything I assumed about the world being proven wrong and all my success now being blamed for the potential collapse of civilization. Denial and delay would be quite appealing!

But none of that really matters because the end of their world is going to happen regardless of anything they do. You can buy your way to political influence but you can’t buy new laws of physics. So we will change, not because of any great moral battle between good and evil, but because people and economics will respond to physical limits – the limits of the climate’s capacity to absorb our waste, the limits of our food production to keep pace with our demand, the limits of living on one planet.

Thus the need to act is no longer just a moral imperative, it’s now a social and economic necessity.

I will over forthcoming Cockatoo Chronicles unpack this argument in more detail, explore how this is unfolding around us, and why we should be excited rather than fearful. I realise many people look at the world events and feel fear – I certainly have those days. After all, as was argued in a recent oped in the NYT by US scientists: “There can be little doubt that what was once thought to be a future threat is suddenly, catastrophically, upon us.”

But when we look at the current US drought, at what is looking like the third global food crunch in just 5 years, and the extraordinary increases in the melt rates of arctic sea ice, all happening along side debt overload and the endless, lurching economic crises that Jeremy Grantham refers to, you can respond in two ways. Yes, these things are cause for great concern, reasons to worry about the suffering that is now and will keep unfolding around us.

But they also say, with clarity and finality, the old economic model is dead. This is not a crisis, there will be no “return to normal”. This is the old world, the world that started in 1750 with the industrial revolution and the assumption that more stuff was all we needed for progress, steadily grinding to a halt. The great economic expansion that drove us through the 19th and 20th centuries, is all but over. Over because it’s physically impossible for it to keep going. This is not philosophy. When things are unsustainable, they stop.

This process is going to be very messy. The climate is becoming highly unstable. The fossil fuel industry is going to fight a ferocious rear guard battle to hold on to the old ways. There is an incredible consolidation of wealth and power by the rich. And the economy is facing intolerable debt and financial pressures.

With the earth full, we are now trapped between debt and growth. If we grow, then spiking prices of oil, food and other commodities, along with ecological constraints will bring down the economy as they did in 2007/8. Yet our impossible levels of debt can only be paid off if we grow. Given we can’t, the financial system will soon break again and this time even more dramatically.

But we can no longer prevent any of those things – they are todays’ reality. What we can do, and what will have the most impact on that situation, is to accelerate the process of dismantling the old and building the new. It is true that all the changes we need to make happen, would occur by themselves over time. But because ecosystem breakdown is driven by lagging causes – the impact keeps happening long after the pollution that caused it – we don’t have time. This makes acceleration the key challenge. Within that context there is much we can do

For a start, we can slow down the last gasp expansion of the coal, oil and gas industries. This is a significant question because the carbon budget is nearly all spent. As Bill McKibben recently argued, the science is now very clear that we have a choice – we either face an out of control climate that will decimate society and the economy or we can rapidly remove those industries from the economy. There is no middle path. And the later we start, the more pain there will be.

We can also drive even harder, the incredibly exciting growth in solar. We can encourage investors to shift from the old to the new. We can implore governments to tax stuff more and people less. We can build a new economy that is focused on creating jobs and good lives for people, rather than bonuses for investment bankers and profits for oil companies. We can drive down inequality, a cancer that is now eating away at democracy and social stability.

Just a decade ago, the call to invest in this new economy was driven by the moral imperative or long-term economic benefit. Today it’s up and running, and is looking more like a sprint than a marathon – a sprint any investors who don’t see it underway will lose.

Solar is perhaps the most immediate and exciting example, with enormous investment now flowing. As Giles Parkinson explains in a recent article at ReNewEconomy.com.au it’s hardly a surprise. In many countries, you can now get solar on your rooftop with payments 20% less than your current electricity bill, while still leaving enough for strong profits by those installing and financing the systems. It’s an easy business proposition to understand and as a result, investors are piling in to the space. They look at the risks in fossil fuels with the inevitability of tightening regulation on carbon, then compare it to solar and see annual growth rates there of around 40% and dramatic and ongoing cost reductions. (The total cost of a rooftop solar system has fallen over 20% in the last year and the cost of solar panels fell around 50%!) So it’s no surprise that last year we saw another new record for the amount invested in renewables – over $250 billion. It’s now up over 90% since the start of the financial crisis in 2007. (How much proof do we need that there’s a new world coming?)

There are many other examples of such progress – too many to cover here. So this longer piece is the first in a series of Cockatoo Chronicles that will explore the great economic transformation now underway. I’ll be discussing more about the solar boom, along with the inevitable crash of the carbon bubble – with its potentially dramatic consequences for fossil companies’ share prices and some national economies. Another area of focus will be the food supply crunch and its implications for conflict and national security but also the economic opportunity for sustainable food production. I’ll also write about the emerging battle between the fossil fuel industry on one side and scientists, environmentalists and the renewables industry on the other. Clear battle lines have been drawn in recent months suggesting a heavily ramped up and economically sophisticated conflict is now emerging.

Sure, there’s plenty to worry about in what’s coming and we should do all we can to smooth the way for 7 billion people to get through this transition. But we must remember, we’re now over the top of the mountain. It’s a long way down and it will certainly be a wild and bumpy ride, but history is on our side and the momentum will take us through. So let’s celebrate and remember – we are privileged to be here now, to be the ones who shape the future. And amidst the chaos and crises, let’s keep our eye on the prize – the third great wave of human progress.

68 thoughts on “The End of the Industrial Revolution”

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My moto for the future is “do more with less”, or the extended version, “do far more with very little”.

A new design project that I have taken on is the design of low cost high retainability housing for the young. The model aims to provide soil to sun living space to fit the $60,000 to $120,000 budget level. Retainability refers to the service life, my target is several hundred years. To achieve this I am drawing on architectural solutions that have already lasted hundreds of years. It is amazing what can be achieved when we scrap conventional economic models and begin again from the ground up.

This is quite true. I haven’t seen it as a crisis, but I see it as an unflowering of immense opportunities for a remaking of economies.

I work and write mainly around waste management, and it is an extraordinary time. Great opportunities are emerging for what I’m calling a shadow economy, or un-production; the unmaking of products to enable raw materials to be reused. Together with reducing our appetite for consumption, this is truly exciting. I am preparing to leave my role managing waste to one where I can make this new world a reality. Of course, the landfillers are fighting it, but they, like the fossil fuel industry, cannot fight physics.

Thanks for the article, and I look forward to more Cockatoo. Glad to find you again – I know you were always around, but I lost track of you.

Nice summary of the crisis that we are in the midst of, and the marking of the shift to a new economic model. We have a long way to go to fully free ourselves from the limitations and challenges of the industrial era/models, but there are many signs of hope across a variety of sectors – especially education.

One conundrum that I occasionally ponder is that we are all (myself included) so tied up in the old system that letting go of it is hard. It’s not just the personal uncertainties for individuals or organizations, it’s the very degree to which we are leveraging the old economy to affect change. It is necessary to do so – I know/believe so, which is why I work on market based solutions to poverty and teach about the role of business and markets in effecting change. However, is it possible that we are inadvertently shoring up the old system and slowing the pace of change when we leverage it for the purposes of change?

Sorry I don’t have time to write with more detail (for now) — and I’m sure this is not news to many of you — but put Paul’s comments together with this article from Bill McKibben, http://www.rollingstone.com/politics/news/global-warmings-terrifying-new-math-20120719, and you simply have to scratch your head for some time in an attempt to figure out where we’re going and how. Paul’s views are encouragingly optimistic, but I fear they are a bit of a gloss and neglect the very real and unpleasant consequences many of our fellow humans — and, who knows? perhaps us as individuals — will face as the fecal matter impacts the giant whirring air-moving device.

Getting punched in the mouth doesn’t encourage contemplation. The best way to avoid the worst of what is coming is to cease attachment to gratification through ownership of man made things; and the power to run them. Both are increasingly unavailable anyway.

“A home of your own” is best called: “Earth” or nothing at all. Becoming one with that is ambition makes affective change possible; an existential epiphany that only avoids dread when solipsism is abandoned as the bad investment it always was.

Resource use for luxury will then become recognizably sociopathic, and taxing wealth for the cash to save the planet as obvious and necessary as laws against murder.

Depends on what you care for most. If it’s Planet Earth, best we do nothing and accelerate a comprehensive human holocaust. A few of us might come out the other side to be able to see how much healthier a natural world it is when it doesn’t have to carry the weight of our 6 billion (and growing). Humans can’t/won’t save the planet from its main problem — unless we are prepared to sacrifice ourselves.

My pessimism, however, doesn’t prevent me from agreeing with most of what you say. Keep up the good work. Humans are hopeless without hope. We might as well smile ever onward until the inevitable arrives.

All good stuff Paul. Well done. I am sorry however to be noting your considerable optimism . Mine is all run out. From a lifetime of research I have concluded that there is only one way left to save us and the planet. That is to stop using money or any form of barter or exchange.
All is free, all is voluntary.
If you have a problem with this, you simply haven’t asked enough questions yet. All the conventional ‘save the planet’ actions we’d like to see will not work when we base our whole existence on a flawed, competitive type system. The current system sets every one of 7 Billion against each other on an uneven playing field. The proof that technology and advancement cannot save us is already there. Only changing the system will fix this one. We’re ready when you are. Every action other than this is futile.
Please don’t waste time…

Just one comment. We know what we are doing wrong, but we don’t know how to replace the wrong model for a right one. Buying some land and moving to the countryside means MY end, no matter how concerned I am. Mind that I already have changed my habits regarding consumming, discarding organic waste, but no way close to a self-sustainable model.

Paul, you have missed the most rewarding trickS in the book – STOP WASTING ENERGY on heating.
Energy conservation – insulation and airtight sealing and reclaiming heat energy can reduce waste by at least 75%
The ambient energy all around is SUSTAINABLE AND FREE – and more than sufficient to provide the remaining 25% energy demand.
The sun, the air, the ground, all hold FREE ENERGY – water holds FREE HYDROGEN – the sun and wind FREE ELECTRICITY.
We have the technology to harvest, conserve and store all of this FREE ENERGY.
Charge the fossil fuel industries for the clean up of the pollution from their filth to pay the people to install the measures to gain free energy for ever.
Fossil fuels are too precious to burn, since they are the valuable resource for the production and installation of the free energy systems of the future.
GROWTH in harnessing FREE ENERGY is SUSTAINABLE GROWTH.

Gush … everything is looking good for INVESTORS who are PILING INTO A SPACE!

A million years after humans are forgotten the BUZZWORDS will live on.

How does any expect SOLAR MODULES to be made? Easy, in a 4,000 degree furnace fueled with natural gas or electricity generated from coal ,,, in billion dollar factories!.Solar is a way to change coal-electricity into the other kind of electricity. Where are the modules installed? In the desert? How? The plant is built with massive frames made in steel mills trucked to the site on thousands of tractor-trailors. The materials are all dug up out of mines with gigantic mining machinery .. all of this runs on diesel fuel … except the mills which run on COAL..

Solar on yr HOUSE! What is a house? 20 or 30 barrels of oil formed into a box that looks like a house, with more barrels making up the street, the truck the solar panels arrive in, the frame the panels are mounted on, the grid that pulls the electricity … there are more barrels wasted in order to make these things work. Here come the Hispanic dude in the pickup who climbs up on the roof and hooks everything up.

If the solar works the kwH are ADDED to the COAL generated electricity b/c this is needed for GROWTH, so that the various companies can MAKE THEIR NUMBERS … so that more INVESTORS can pile into the space.

Better idea is for INVESTORS to pay young girls around the world not to have children. The oldsters die automatically … it’s called OLD AGE. Given a short period of time with reduced birthrates there is LESS DEMAND FOR CAPITAL and a long-term DIVIDEND. Investors won’t get it but maybe the world won’t blow up.

Paul, thanks for the healthy dose of optimism. Please excuse if I take issue with one of your central sentences:
“So we will change, not because of any great moral battle between good and evil, but because people and economics will respond to physical limits – the limits of the climate’s capacity to absorb our waste, the limits of our food production to keep pace with our demand, the limits of living on one planet.”
The limits of the planet are to a large extent constructs of society. It is our definition (and a wise one, in my view) to set a limit of 2 degrees C warming as the upper limit of tolerable climate change. Mankind can, and probably will, go well beyond these limits. The negative feedback by climate impacts upon the economy is a relatively slow one. Even with a massive drought and superstorm Sandy, the US GDP has hardly taken a hit.
Unless we wrest the power from the fossil interests, they will continue with their business pumping carbon from the earths crust into the atmosphere. There are enough reserves, so the limits of reserves will not be felt early enough. And there will be no collapse of the global economy from climate impacts early enough to prevent a lasting damage to the earths hospitality for human beings.
No, it remains upon us to impose human laws to guard the limits created by the laws of physics. This is the challenge of our times.
A final word on the inexorable rise of renewables: Read the latest from Bloomberg new energy finance: 2012 was a terrible year for the industry, with a fall in absolute levels of investment. I very much hope this remains a temporary dip…

Hi Paul,
All good stuff BUT we have never invented anything like sustainable food production. Without this all our new energy technologies will not feed us. Modern ag is based on fossil fuel usage. We use about 7 to 10 calories of fossil fuel to produce one of food. Sorry to sound gloomy, but I am involved in agriculture (probably the greatest destructive force humanity has invented). Without solving the basic problem of food production we will remain in the current overshoot situation (which most of humanity is blissfully ignorant of) until billions suddenly starve to death. Dying of hunger with a solar powered thingie in your hand just might not cut it.
I’m glad you are excited about the potential decline in fossil fuel usage, but without a sustainable ag and appropriate settlement pattern most of humanity will die when the simple limits of soil and water are reached.

I think we need just the right balance of fear and optimism to motivate people to change. Some hope is essential to move us out of complacency and total discouragement. Your book is a brilliant expose of the current problems our planet faces coupled with a brave attempt to chart a path out of the mess. This type of vision for moving forward is so very needed. An important topic I would like to see added to this discussion is the replacement of conventional agriculture with permaculture, a perfectly designed system for individual environmental responsibility and sustainability. I think such a shift will be an essential component of our survival.